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Dan Primack

One unusual aspect of this site is that it covers two asset classes – venture capital and leveraged buyouts – that don’t typically overlap (save for their funding sources). So whenever there is a story that could apply to both… well, I get a bit giddy. Such it is with Internet gambling. No, not because both […]
Digital Sky Technologies reportedly plans to go public next year in New York, and already has hired Goldman Sachs as a lead underwriter. For the uninitiated, DST is a Russian Internet conglomerate known for taking minority stakes in companies like Facebook, Zynga and Groupon. It also has lots of local investments, including in leading Russian web portal Mail.ru. Matthew Ingram described DST as a “mutual fund of hot startups.” He's largely right, except that mutual funds disclose financial information on underlying portfolio companies (or at least it's easy to find, since the companies are publicly-traded). DST, on the other hand, may not be required to tell shareholders much more than company name and date of investment. In other words, a DST IPO won't open the Pandora's Box that worried so many VCs during the public pension transparency debatse of 2002 and 2003.
Secondary market prices for private equity funds are on the rise, according to a report being released tomorrow by Cogent Partners. The data looks at transactions from the first half of 2010, and finds that average high bids rose to 79.6% of NAV from 72% of NAV during the second half of 2009. Buyout funds were particularly hot, increasing to 86.4% from 68.9 percent. All of this leads me back to an argument I began making nearly a year ago: Secondary buyers blew it in 2009. They had a record amount of dry powder, but were paralyzed by fears that new deals would be like trying to catch a falling knife. "The sellers will cave," secondary buyers thought, "particularly as their liquidity squeeze tightens."
My weekly small biz video for Reuters was about the most active VC firms of 2010 (so far), which we posted on Monday. Per usual, filming just a few doors down from the home office...
The University of Texas Investment Management Co. (UTIMCO) was the first public institutions to regularly provide fund-level performance data for its private equity portfolio, and remains the most up-to-date. While CalPERS, for example, is still listing numbers as of December 31, UTIMCO just sent over a marks through the end of May (yes, this May). Included are IRRs and other figures for nearly 200 venture capital and buyout funds (plus some funds-of-funds and credit vehicles). Among the more notable names on the VC side are Austin Ventures, Foundry Group, Foundation Capital, Morgenthaler Ventures, Spark Capital and Union Square Ventures. The buyout group includes virtually all the big names: Apollo, Blackstone, Carlyle, KKR, Hellman & Friedman, TPG Capital, Warburg Pincus and more. Get the data after the jump...
The NVCA and Cambridge Associates today released new VC performance data (through March 31), showing improved short-term returns but continued weakening of 10-year returns. Five-year returns experienced a modest bump, after dropping the last time around. Overall, 10-year mean VC returns stand at -3.7%, compared to 2.3% for the DJIA and -6.3% for the Nasdaq over the same time period. Five-year returns for VC come in at 4.9%, compared to 3.3% for the DJIA and 3.7% for the Nasdaq. One-year returns (for whatever they’re worth) for VC was 6.5%, compared to 49.6% for the DJIA and 56.9% for the Nasdaq. You can download all the relevant data after the jump...
Walt Disney Co. today announced that it will buy social gaming company Playdom for up to $763 million. It's the largest exit of a VC-backed gaming company since Playfish was acquired last fall by EA, and is significantly larger. So we've got five questions for David Cowan of Bessemer Venture Partners, which became a Playdom investor just last month: 1. Playdom reports fewer monthly numbers than did Playfish at the time of its acquisition, but is being acquired at a price that's around 90% higher. Why? Cowan: I think there are three answers here. First, you always have to look at the specific acquiror and the strategic fit and value of the company being acquired. I don't know the specifics of the valuation that went into Playfish, but do know that Disney expects a lot of synergies as it brings the Playdom team into other Disney properties. Second, number of users is only one metric. I think that Playdom's revenues were significantly more at the time of acquisition. Third, Wild Ones is totally, totally awesome.
There were a dozen venture capital deals announced yesterday, representing more than $100 million in raised capital. But this morning I’d like to focus on less than 1% of that tally: The $975,000 round for LearnBoost, which is developing a Web-based gradebook for teachers. Not interested in online education innovation? That’s ok, because this column is more about the financing than the company itself. Specifically, LearnBoost raised its $975k from four “big” venture capital firms: Atlas Venture, Bessemer Venture Partners, Charles River Ventures and RRE Ventures. It also had a bunch of angel participation – including from James Hong and Naval Ravikant – which means the average VC firm invested around $230k (assuming an even split and $10k per angel – all of which may be wrong).
We're well into the second half of 2010, so I figured it was time to see which VC firms had been the most active so far this year. No big surprises, except perhaps that Intel Capital nearly fell out of the Top 10. Or maybe that Redpoint Ventures, which ranked fourth when we did a similar post back in March, has dropped to #28. What follows is from our VentureXpert database, based on global investment pace (MoneyTree numbers, on the other hand, are only for investments in U.S. companies). It only includes "institutional" VCs, as opposed to super-angels (some of whom would make the list). Per usual, just a reminder that money in doesn't always correlate to money out...
My weekly small biz video for Reuters is about VC industry shrinkage, in light of conflicting new data. Per usual, filming just a few paces away from the home office:

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